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JOHANNESBURG - South African retail sales rose 2.4% year-on-year in June following a revised 2.3% increase in May, Statistics South Africa said on Wednesday.

On a month-on-month basis, sales were up 0.3%. For the quarter, they rose 2.4% in the three months to the end of June compared with the same period last year, the statistics body said.

"This was slightly ahead of market expectation of a 2.3% y/y increase. A disaggregation of the data shows that chief among the contributing categories to this improvement were Clothing and Footwear, General Dealers and Other Retailers. In contrast, volumes in the Hardware, Paint and Glass category continued to slide," according to FNB.

"The seasonally adjusted retail trade sales increased moderately by 0.3% in June, versus 0.1% recorded in the previous month. This means that the 2Q19 seasonally adjusted and annualised retail trade sales rebounded by 4.4% q/q, following a contraction of 2.4% q/q in 1Q19. As such, the retail sector will contribute positively to GDP in the second quarter," FNB said in a statement. 

According to FNB, year-to-date growth is lower than that of the same period last year (1.7% y/y versus 3.6% y/y), which points to a muted demand environment. This is also illustrated by the persistently low retail inflation readings, which remain below consumer price inflation levels, demonstrating retailers’ inability to pass on price increases. Demand is curbed by persistent pressures on consumers’ discretionary income, via weaker labour markets and higher income taxes.

BUSINESS REPORT ONLINE / REUTERS